AIG: Limping Along, with Nearly $170 Billion of Aid
In the financial crisis, AIG came to symbolize all things bad about our nation's financial system: Big bonuses. Complicated financial instruments. Too big to fail. On Sept. 16, just one day after Lehman Brothers declared bankruptcy, the Federal Reserve sent AIG $85 billion in emergency funds — the beginning of the bailout bonanza that came to define the government's response to the financial crisis. Within a few months, Uncle Sam's AIG tab had grown to $170 billion. The company is one of the largest insurers in the world, selling everything from life policies to retirement plans. It was undone by a small group of traders who sold insurance policies on the riskiest of mortgage and other bonds and produced tens of billions of dollars of losses. The plan: sell off as much of the good parts of the insurance giant as possible to pay off the government, the rest of it belonging to creditors.
A year later, though, AIG remains intact. The large breakup that was going to pay off taxpayers never materialized, at least not yet. Still, AIG's finances seem to be improving. The company's shares have soared recently to $40, from around $10 three months ago. And AIG has begun to pay taxpayers back, though it's lowered it debts to the government by only a few billion.